Did you invest in an equity-indexed annuity (EIA) a few years back? If you bought it seven years ago, the maturity date may be approaching fast. And you might only have a small time-window to decide whether to renew the annuity or place your money elsewhere.
If you look at what has happened to interest rates and the markets since you bought your EIA, you may understand why the specifications for a new contract might differ. Interest rates are at a four-decade low, and the markets have swung wildly. Therefore, there’s a good chance that you will see lower market participation rates and lower maximums (caps) on amounts credited to your EIA. In addition, you may have to make a longer-term commitment on your new contract.
Also the company might now have the ability to change participation and cap rates on the annual anniversary dates. Whereas, your original contract may have kept the same numbers throughout the term. However, this could work in your favor. Because if the equity markets become less volatile, there’s the chance that index option premiums will decrease, thus allowing annuity companies to offer higher annual participations levels and caps.
Times have changed and many of our investments have as well. And a new EIA might not be identical to the one you bought before. Nevertheless, it will still provide the same opportunity for tax-deferred growth and the other features that encouraged you to make your original purchase.
A qualified advisor can evaluate your current EIA and compare it to the new one that your annuity company has offered. Furthermore, I will see how it measures up to other companies’ products. Please click below to discuss a plan that will work for you.
Note: There may be risks with EIAs that include, but are not limited to, the fact that the return is calculated at the end of the vesting period; often, the investor cannot access cash prior to the end of the vesting period without restriction; if the index performs well, low interest rates are irrelevant; each annuity is subject to fees and charges; and withdrawals may be subject to surrender charges. These restrictions have an impact on performance and must be considered when deciding to purchase or exchange the annuity.
Important Facts You Must Know If You Already Own An Annuity Or You Are Considering An Investment!
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